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Three of the most important City of London financial institutions are pushing to quicken the pace of diversity and inclusion in financial services and ward off the dangers of groupthink and overconfidence in decision making. Regulators the Financial Conduct Authority (FCA), Prudential Regulation Authority (PRA) and Bank of England are asking for views from the City on plans to improve diversity and inclusion in financial services. [pullquote]Groupthink and overconfidence are often at the root of financial crises” – Sir Jon Cunliffe, Bank of England[/pullquote] Policy options put forward by the regulators include the use of targets for representation, measures to make senior leaders directly accountable for diversity and inclusion in their firms, linking remuneration to diversity and inclusion metrics and how the regulators approach to diversity and inclusion in non-financial misconduct. Failures to improve social mobility in recruitment, the number of women in senior positions and the proportion of employees from ethnic minorities were cited by the regulators in a discussion paper. For example, they drew attention to the 2021 Women in Finance Charter Annual Review that showed in 2020 there was, on average, 32% female representation in senior management, showing an increase of less than 1 percentage point year on year from 2017. The Green Park Business Leaders Index, the regulators said, showed a decline in the number of black leaders and the black pipeline to senior management for FTSE 100 companies. Fewer than 1 in 10 management roles in financial services are held by black, Asian or other minority ethnic people.
